SPEED.STYLE.SMILE: Scootersharing via App

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1 Interview with Magnus Schmidt, CEO Scoo.me SPEED.STYLE.SMILE: Scootersharing via App Magnus Schmidt offers a chance to enjoy a little more freedom: city-dwellers with a life-style orientation can use his app to rent a scooter without any hassle. Less thinking in silos and more openness is his recipe for successful mobility concepts. Scoo.me offers an additional form of mobility in urban areas in the form of a free-floating (i.e., not tied to specific stations) scooter rental system. The company was founded in 2014 and is currently available in Munich in a proof-of-concept phase with 13 vehicles: 12 Vespa scooters and one electric scooter. Following the successful launch in November of last year, the fleet will be expanded to 30 vehicles this summer. 50 Detecon Management Report dmr Special Automotive 2015

2 DMR: Scoo.me offers yet another form of urban mobility, a scootersharing service. How would you describe your company, and what does it offer to your customers? M. Schmidt: We have taken up a position in an interesting gap in urban mobility between bikesharing and carsharing with our free-floating concept. Above all, we would like to give Scoo.me users a life-style feeling and create a brand with a high awareness value, one that has the potential to become a so-called love brand. We are aware that this is no easy task but this is the idea we have been pursuing from the very beginning. Our core thought is to communicate a sense of life, to have fun riding a scooter, and to be mobile. This entails much, much more than simply giving our customers another way to move rationally from A to B. Our company slogan is Speed, Style, Smile, and everything we do is in keeping with this slogan. It is why our work is centered so strongly around the users. When we developed our Scoo. me app, for instance, we consciously made our decisions on whether the app is fast, fun to use, and makes us laugh. DMR: What target group does Scoo.me focus on? M. Schmidt: Basically, everyone can be reached. The only limiting factor is the smartphone dependency of the business model that is currently still restricted to ios and Android devices. The extremely broad reach of our user base has positive as well as negative side effects. The negative point is that a specific target group never crystallizes. That makes it more difficult for us to address any particular group as a specific target. During our kickoff event last year, women and men in the age group 50+ were especially interested in our product. This group was so excited because they associate memories of their youth with the Vespa scooters, and many of them have wasted little time in registering with Scoo.me. The coolness factor of a new, accessible mobility model in the city is more appealing to the young generation. Young users have little desire to take street cars or subways, and they cannot afford cars or do not want to spend the money for them. We clearly see a dichotomy here. DMR: Scooters are much more an established part of daily traffic in Asia or southern Europe than they are in Germany. Providers like Cooltra who claim to have more than 100 rental stations in Spain are apparently highly successful. What potential do you see in a seasonal market like Germany? M. Schmidt: There are certainly seasonal dependencies and fluctuations here, but we do not explicitly operate a seasonal business. We launched the service in November last year and recorded revenues from the very first day and acquired just under 1,000 users. This is clear evidence that our business model is an attractive one even in the rainy and colder seasons. We leave the vehicles outside 365 days a year so that they are available whenever weather conditions permit. Days when roads are icy are the exception; the risks are simply too great then. Winter business is fun because it s trickier. For one, the technology must keep on working even when the thermometer plunges to 20 degrees below zero; for another, it is a challenge to think about actions we can take so that our customers use the service in winter as well. For instance, we put out down jackets or gloves that the first users may keep. There are plenty of ideas, and we believe there is still a lot of potential waiting to be exploited. DMR: What vision and what goals are the basis for your business model? M. Schmidt: As far as the goals are concerned, we are still in a proof-of-concept phase for Munich and must wait until we have some figures and have seen developments. In this respect, we tend to be conservative and cautious. Basically, we believe that the business model per se has an enormous amount of potential also in Germany. An affinity to two-wheeled vehicles definitely exists, even though the car still holds a higher status in people s minds. Our vision is this: if the model works here, it will work everywhere in Europe, perhaps even worldwide. We have already developed concrete ideas on how we can adapt the subjects of emotionality and life style within the business model in other countries so that we can be successful there as well. So our vision is clearly aimed in the direction of Europe. DMR: As you are a free-floating provider, you choose the vehicles for your scooter fleet yourself. Have there been, or are there, any plans similar to those of established carsharing providers to expand your business model to include a manufacturer of gas-engine and electric scooters as a strong partner? M. Schmidt: We consider ourselves to be marketers coming from the digital world. We market vehicles in a different way as rental stations, not through sales. We are pursuing a user-centric 51 Detecon Management Report dmr Special Automotive 2015

3 approach and want to market the vehicles that appear most attractive to the market. That severely limits the group of possible vehicle providers. A Vespa is predestined for this purpose because it is a high-quality product and everyone is familiar with it and attracted to it. That makes it easy to market. We don t know today if this will stay like this in the future. For instance, we don t know what will happen if electromobility becomes more important for scooters. Generally speaking, growth can be achieved for us with a partner, but less so with manufacturers, because we believe that the manufacturers are highly interested in selling vehicles. DMR: Scootersharing is another building block in the multimodal mobility of today. What tendencies do you see for the future of mobility in the urban environment? M. Schmidt: I see the future in the multi-modal mobility concept. There is plenty of potential here that a manufacturer would like to exploit. Most of them, however, still think in a silo, in a closed system. The Internet has set us straight on this point, however; all models that are open and user-centric and offer interfaces are the models that have been successful. I suspect that it will take a number of years before the manufacturers in the mobility sector open up and realize that they will not succeed with an encapsulated system alone. One example is the online platform quixxit. It displays a consistent platform to show users how they can utilize various forms of mobility to get from A to B fastest or cheapest. Doing without your own car is not possible without this mobility concept, provided that the accessible infrastructure can always take you from A to B. This has already been recognized from the user-centric perspective. But the ones who have not yet understood how it works are the manufacturers themselves. This is the exciting question: How will the mobility sector succeed in offering flexibility and a surplus of mobility as a package to users in such a way that they can always find precisely the forms of mobility that they need at the moment one choice today, tomorrow a different one? DMR: In your position as a scootersharing provider, you are a part of the sharing economy. There are recent studies that show that the number of private car owners in Germany is still on the rise, despite the decline in population, a contradiction to the principle of sharing instead of owning. How do you see the development of the sharing economy in the sector of commodities? Does the model have a future? M. Schmidt: Sharing economy has both a positive and a negative side for me. The negative side is that we will possibly not be able to obtain a lot of things we now take for granted without paying for them in the future. Our social togetherness is being monetarized and capitalized to the far corners. I hope that the sharing economy does not move too far in this direction because I would consider that alarming for our human relationships. The positive side is that I can make significantly more resources accessible if they are shared than if I have to own them. It s not necessary to own a car 24 hours a day. Under normal circumstances, two to four hours a day is enough a little longer for vacation trips. For my vacation, however, I need a station wagon, while a compact car is plenty for my daily errands. This is where the sharing economy shows that there are definitely other options available. I believe that some studies are premature in concluding that a concept like this will ultimately fail. I think it will take years, perhaps even decades, before it is really possible to say what effect the sharing economy has on mobility. I do believe, however, that the effects will be huge and that current developments are irreversible. Today, the car still serves as a status symbol, the embodiment of freedom and mobility, and that is a mindset that will have to change in our generation as well. Moreover, there has to be a reliable infrastructure. This goal is being rigorously pursued. DMR: You have fully digitalized the registration and logon process. All of your scooters are permanently connected with the Internet. What is the idea behind this? M. Schmidt: Our objective is convenience for the customers. We create that through digitalization. We have implemented it in two stages: the digital onboarding and logon process and keyless operation. Every vehicle can be completely rented, opened, and started via the app. We did not originally plan keyless operation of the vehicles, but the question of what we would do with the vehicle key soon arose. If the key is left with the vehicle, in whatever form, you have to develop a use case for the event that a user absent-mindedly puts the key in his or her pocket and takes it home. What do you do then, how do you contact the user, and above all, how do you get the key back to the vehicle? That led us to decide in favor of the keyless option. The only thing a user needs is a mobile device with our app. This is where the idea of full digitalization came from. This also made it clear that the scooters had to be permanently connected to the Internet and that there must be communication between the vehicles. 52 Detecon Management Report dmr Special Automotive 2015

4 DMR: What technical solution is the basis for the digital registration and logon process? Did you take any other concepts as a model? M. Schmidt: We are the first provider to have digitalized this process completely. The registration process and the driver s license check involved with it were a challenge. In Germany, every municipality, city, or community can issue a driver s license. So if you wanted to check a driver s license directly with the issuing office, you would have to set up an interface to all of these authorities in Germany. That was not an option for us. We decided to go with a service provider who supports us during the driver s license check with the digital inspection of the security features and a biometric comparison. We actually took as our model a bank that offers the possibility to open an account via Skype. We thought that if a bank can solve the problem of the registration process via Skype, we can map the validation of the driver s license in a similar way. We are already orienting our activities toward WhatsApp, and that works very well. DMR: Your previous career, which has included positions at Payback and United Internet Media, gives reason to believe that you are a big fan of digitalization. What disadvantages for the mobility of the future do you see in an increasingly digitalized world, and where do you see the hurdles for the next few years? M. Schmidt: Digitalization has one great disadvantage: there is a lack of permanence in so many things! Everything is highly ephemeral and fleeting. When you have something you can touch, it is anchored substantially more firmly in your mind. Print media have a completely different effect in comparison with the same content in an . s are clicked, deleted, and gone. We are attempting to counter this with the product on the road. As a company, we think very much in digital terms; our processes are highly digitalized and automated. Automation of marketing is for us the be-all and end-all, and we incorporate very powerful software into our communications. If we did nothing but sit at the PC and create banner advertising, however, that would be strictly digital, but would not have any longer-lasting effect. As we are marketers, we are very conscious of the fact that a sense of touch is important paper or a card as the carrier medium, something that stays with the customer. It is just as important to us, however, to be present ourselves on the streets through the vehicles and our promotion teams. We must make even greater use of emotionality, tangible experiences, and above all the related memories. This is a core task that we have along with digitalization. At this time, I see the hurdles to mobility in the lack of consistentchains and seamless utilization of mobility opportunities in the sense of intermodal mobility. Silo thinking in the individual mobility concepts is definitely a hurdle. If these walls are not torn down, it will not be possible to offer a consistent experience to consumers it will remain fragmented, and that will make it unattractive. DMR: Munich can be mentioned in the same breath with Berlin and Hamburg as one of the most active startup locations in Germany. Were you able to profit from this when you founded your company? M. Schmidt: In some ways yes; in some ways, no. We definitely profit as a startup from these events especially from the information events. There are a lot of contact points in Munich where you can obtain information, and that was extremely helpful for us. It is important to point out, however, that the startup mentality in Germany is in general not as pronounced as in the USA, for example. Everything in this country is very traditional; there are institutional investors who tend to be oriented to the universities and who expect patents, for instance, best of all in the biotechnology sector. We do not hold any patents and are not set up to acquire any. We are more an operator of state-of-the-art technology. That is why it was very difficult for us at the beginning to get into touch with investors, banks, and business angels and to secure funding. In this sector, the startup and investor climate is not well developed. Everything is very slow, very risk-oriented, very conservative regardless of whether you are in Berlin or in Munich. DMR: What hurdles do you see for startups, and where do you see potential for improvement in the framework conditions? M. Schmidt: The first area where I would like to see improvement is in a greater willingness to take risks on the part of investors as well as of banks and government. The process of obtaining subsidies at any bank is a painful one right from the first day. As I see it, politicians pay too much lip service. I would like to see other framework parameters in place here. So: greater willingness to take risks, more flexibility, speed. 53 Detecon Management Report dmr Special Automotive 2015

5 DMR: A personal question here at the end: How many kilometers do you cover on a scooter every year? M. Schmidt: I estimate that by the end of this year I will have traveled about 3,500 kilometers, which is really a lot. We can be seen on the streets every day, checking to see where people have left the scooters and whether everything is working properly, making sure that no driveways are blocked or that a scooter is not parked in an area where there is no reception (like an underground garage), and so on. This contact to our consumers is very important to us. At this time, our early adapters and fans are the ones who are sending us a lot of messages and feedback. If we did not exploit this momentum now, we would lose a lot because it helps us to improve the product and the service. We don t have an office. We must experience what is happening if we are to be close to the customers. The interview was conducted by Dominik Fischer, Business Anyalst, Detecon International GmbH. MAGNUS SCHMIDT Founder and CEO of scoo mobility GmbH In May 2014, Magnus Schmidt founded scoo.me, the world s first free-floating scootersharing service, offering scooters with electric and fossil-fuel drive from one source; the service relies on digital technology for the entire scope of its operation. The recognized expert for online marketing and business development had previously held various management positions most recently at PAYBACK GmbH where, in July 2012, he took over the management of the newly created business unit Digital Marketing. Other positions with management responsibility included United Internet Media AG, webmiles GmbH, a member of Bertelsmann Group, and YOC AG, the provider for mobile marketing solutions. A marketing and sales specialist, Magnus Schmidt focuses on holistic approaches of digital value added and has published a number of specialist articles on the subject of digital communications. 54 Detecon Management Report dmr Special Automotive 2015